Alice Corp. Decision: Computer-Implemented Method Not Patent Eligible

In the case of Alice Corp. Pty. Ltd. v. CLS Bank Int’l, the Supreme Court held (again) that computer-implemented process claims are not patentable under Section 101 of the U.S. Patent Act when they are directed to an abstract idea.

The claims at issue relate to methods for mitigating settlement risk between two parties by exchanging financial obligations using a computer system as a third-party intermediary. The Court found that the claims were directed the abstract idea of intermediated settlement (i.e., using a third party to mitigate settlement risk), which is a prevalent practice in commerce. The Court found further that simply tying that process to a generic computer having conventional components and that adds no meaningful limitation beyond linking “the use of the [method] to a particular environment,’ that is, implementation via computers,” does not make it eligible for patent protection. In that case, the computer adds nothing to the method that was not already present when it was performed in absence of the computer.

This decision does little to clarify but does not depart from most practitioners’ understanding of how these types of method claims should be interpreted under Section 101. The Court declined to “delimit the precise contours of the ‘abstract ideas’ category in this case.” Instead, it states “It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here. Both are squarely within the realm of “abstract ideas” as we have used that term.” The decision does clarify, however, that merely implementing a patent ineligible method on a generic computer will not transform it into a patentable method. To be patentable, claims will need to improve the function of the computer itself or to improve some other technical field.

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